Supplier risk assessment and monitoring for the automotive industry

Abstract

PurposeThis research aims to develop a supplier risk assessment methodology for measuring, tracking, and analyzing supplier and part specific risk over time for an automotive manufacturer.Design/methodology/approachSupply chain risk literature is analyzed and used in conjunction with interviews from the automotive manufacturer to identify risks in the supply base. These risks are incorporated into the development of a temporal risk assessment and monitoring system.FindingsA framework of risk factors important to the auto manufacturer is presented. A multi‐criteria scoring procedure is developed to calculate part and supplier risk indices. These indices are used in the development of a risk assessment and monitoring system that allows the indices to be tracked over time to identify trends towards higher risk levels.Research limitations/implicationsThere are a number of operational issues identified in the paper that could be investigated in future research. One such issue is the development of alternative risk assessment methods that would increase the sensitivity of the risk analysis.Practical implicationsThe framework is implementable in firms interested in understanding and controlling risk in their supply base. The research stems from an industry project with an automotive manufacturer. The method is designed to be practical and easy to implement and maintain. The system also has a visual reporting mechanism designed to provide early warning signals for potential problems in the supply base and to show temporal changes in risk.Originality/valueThis paper presents a dynamic risk analysis methodology that analyzes and monitors supplier risk levels over time.